'Jobs enigma' not going away

Britain's bafflingly positive employment figures are set to continue to confuse economists into 2013.

The Chartered Institute of Personnel and Development has predicted further increases in employment next year in its annual barometer report on the labour market.

It said employers had significant reserves of skilled labour capacity which they could call on to support growth, but acknowledged the economic recovery remained vulnerable to knocks in confidence.

"Whatever happens, it seems certain that the squeeze on employees' living standards caused by average earnings going up by less than prices will continue into a fourth consecutive year," the CIPD's chief economist Mark Beatson said.

Labour has often pointed to high numbers of those reluctantly forced to accept part-time work, when they would prefer a full-time job, as part of their explanation for rising employment figures.

The CIPD disagrees, saying that theory is not backed up by figures showing rising numbers of average hours worked.

It says the 'jobs enigma' is better explained by a combination of factors: moderation in labour costs, 'labour hoarding' which sees employers reluctant to let skilled employees go, and the growth in the overall supply of labour.

The latter forces job seekers to be "more efficient and competitive in their search for work, improving the overall efficiency of the labour market", Beatson added.

"We also think the OBR may be proved pessimistic in its prediction that it will take until well into 2015 before employment hits the landmark figure of 30 million," he said.

"Employers are proving adept at maximising the potential of the UK's flexible market, leading us to conclude that the government may be able to celebrate 30 million employed before the next election."